Guaranteed Good Faith Estimate

Caron · Posted: Tue Oct 11, 2005 3:56 am Post subject: Guaranteed Good Faith Estimate

Homeowners in the United States have been complaining about the unexpected rise in closing costs of a mortgage loan. Although they receive a rough estimate of these costs through the Good Faith Estimate(GFE), yet they require paying extra fees at closing. The law has no control over the unexpected rise in mortgage costs and that is why certain lenders charge fees which are comparatively higher than that stated in the Good Faith Estimate.

But major lending institutions and mortgage brokers are now recommending strict rules and regulations regarding the guarantee of the amount of fees provided in the Good Faith Estimate. Organizations like the National Association of Mortgage Brokers are in favor of a re-disclosure of the loan fees by lenders and brokers whenever the closing costs exceed 10% over the original estimated value. The consumers may also sue the lender or broker in case no re-disclosure is made before closing.

The National Association of Independent Mortgage Bankers offers guarantee on the charges that can be controlled by the lender. These include fees for appraisal, processing, underwriting and credit report fee and others. Several mortgage companies are now offering guarantee on loan origination fees, points and title insurance costs after the interest rate on the mortgage is locked. The Mortgage Bankers Association of America is about to implement its plan on the guarantee of closing costs.

Several mortgage companies also specify which fees are not within the lender's control, that is, the homeowners insurance, daily interest charges and escrow fees, etc. The guarantee regarding the Good Faith Estimate is the result of the initiative taken the U.S Department of Housing and Urban Development (HUD) to reform the RESPA settlement cost and make it effective sometime in 2006.

Guest

Hi guys

can u pls tell me if good faith estimate and hud-1 statement are the same?

Cliff · Posted: Mon Oct 17, 2005 9:55 pm Post subject:

Hi Nick 107,

No, a GFE(good faith estimate) and a HUD-1 statement are similar but are 2 totally different documents.
A Good Faith Estimate is what you will receive from your loan officer/Broker of the breakdown of the fees that you will pay upon closing your loan. It gives you a general idea of title fees, processing fees, recording fees, broker fees...etc.. You would receive this document before closing on your loan.

HUD-1 Statements is a settlement statement. It's a breakdown of the deal with both buyer and seller costs. You receive this document upon closing your loan.
These figures are what you actually paid whereas a GFE is just estimated figures.

Hope that answers your question.

Thank you

Cliff

Samantha · Posted: Mon Oct 17, 2005 10:24 pm Post subject: RE:

Hi Nick 107,

What Cliff has said is right, Good Faith Estimate and HUD-1 statement are two different documents.

Good Faith estimate includes loan related expenses that will be due at the closing. Good Faith estimate is provided by the lender within 3 days of your loan application unless the lender rejects your loan. A good faith estimate is just an estimate and you don?t have any guarantee about the actual cost.

HUD-1 is a statement that is used by the settlement agent to itemize all the expenses imposed on a borrower and a lender for a real estate transaction. It gives both the borrower and the lender a complete list of their incoming and outgoing funds.

Now the lenders are planning to give a guarantee on good faith estimate also.

God Bless You

Thanks,
Samantha

Guest

I have taken a mortgage loan. The good faith esitmate shows some of the paid items as "PFC" and "POC". Can you tell me what they actually mean?

Thanks in advance.

Caron · Posted: Mon Oct 31, 2005 3:30 am Post subject: RE:

Hi Wilfred,
Welcome to the forums.

What you usually find in your Good Faith Estimate is a list of the fees involved in the closing of a mortgage loan. The "PFC" denotes "prepaid financial charge" such as points or the payments for tax service. The "POC" means an item "paid out of closing". It may include charges for the credit report or for any inspection.

Hope that this will help you.

Regards,
Caron.

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